Around a fifth of would-be first-timers that are currently renting a property believe it will be “virtually impossible” to secure a mortgage to buy their own home, according to data published by Halifax.
The latest release from the Halifax Generation Rent report reveals a wide disconnect between prospective first-time buyers and their parents with regards to their perception of the market, with just 12 per cent of parents choosing the same statement regarding obtaining a mortgage.
Three years ago, both groups were more pessimistic about the first-time buyer market, with 21 per cent of parents and 29 per cent of prospective first-time buyers saying it was virtually impossible to get a mortgage.
The report contains data from interviews with over 40,000 20-45 year olds built up over five years, and over 4,000 parents of 20-45 year olds over the last four years.
An earlier release from the study in April revealed that confidence among first-time buyers has dipped as a result of soaring property prices and tougher mortgage assessments, with only 43 per cent are currently saving to buy a property, down six percentage points.
Halifax has said that the numbers do not reflect the reality of buying a home, as while numbers of first-time buyers are down from a peak in 2006 of 402,800, having fallen as low as 192,300 in 2008 they have recovered back to 311,500 in 2014.
Looking at how parents have supported their children in buying their first home, the data make it apparent that direct parental contributions towards the costs of a mortgage have remained steady.
Last year, 27 per cent of parents contributed towards a deposit, compared to 22 per cent this year. Some 57 per cent of parents who own a property reported to having contributed, or planning to contribute, towards their child’s deposit, compared with 24 per cent of parents who rent.
Furthermore, 24 per cent of parents who own said that they were, or plan to be a guarantor on a mortgage compared with just 7 per cent of parents who rent.
The report also found that first-time buyers moving back in with mum and dad is a growing issue, and in 2015 28 per cent of parents said their children moved back to their family home, compared to 24 per cent in 2012.
Craig McKinlay, mortgage director at Halifax, said: “The... report shows a clear divide between parents and their children as regards optimism over getting on the housing ladder. In reality there are more mortgages available which require a 5 per cent deposit and first-time buyer numbers are increasing.
“But whether it is giving their children a cash lump sum or providing a roof over their heads while they save, it is clear the bank of mum and dad will have a role to play in helping their children get on the property ladder for the foreseeable future.”
donia.o’loughlin@ft.com
